Coordinating innovation projects with high tech suppliers through contracts

This paper investigates the supply chain (SC) management and innovation strategies with the purpose to identify: 1) which commercial contracts are suitable to coordinate SC innovation projects; 2) which motivations push SC members to adopt contracts to pursue innovation projects; and 3) how contractual clauses differ in different stages of the innovation process. A comparative case study among five High Tech (HT) companies in the Netherlands uncovers the motivations for adopting certain contracts over others. The findings illustrate that contracts discussed in the literature (sales-rebate, buy back, revenue sharing, etc.) successfully work for commercial agreements but not at all for coordinating joint innovation projects. Motivations for adopting these contracts do not limit to general company characteristics but also stretch from historical reasons to future strategies. The findings help HT companies to setting up the basis of a contract to coordinate joint innovation projects within SCs.